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TMI Blog2013 (8) TMI 995X X X X Extracts X X X X X X X X Extracts X X X X ..... be starting point for reckoning limitation for the purpose of Section 201 of the Act. In view of the above discussions, we find no merit in the ground raised by the assessee and the same is hereby rejected. - Decided against assesse. - I.T.A. No. 239/JP/2012, I.T.A. Nos. 250 to 252/JP/2012 - - - Dated:- 29-8-2013 - SHRI B.R. JAIN AND SHRI KUL BHARAT) For the Department : Shri A.K. Khandelwal. For the Appellant :Shri Salil Kapoor O R D E R PER KUL BHARAT, J.M. These four appeals, three by the assessee and one by the revenue filed against the order dated 23/12/2011 passed by the learned Commissioner of Income Tax (Appeals)-III, Jaipur. Since the common issues are involved, were heard together and are being disposed of by common order for the sake of convenience. 2. First we take up the appeal of the revenue in ITA No. 239/JP/2012. The grounds raised in this appeal are as under:- The Ld. CIT(A) has erred in law and on the facts in holding that the assessee was not liable to deduct tax regarding such distribution/Channel partners, who have certified that they have filed their return of income for the concerned assessment year and their total inco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... prepaid products of the appellant company. The Ld. CIT(A) directed the Assessing Officer to verify the factual correctness of the said claim after giving an opportunity of hearing to the appellant and to allow relief accordingly. Against this order, the Revenue is in appeal. 5. The Ld. CIT D.R. submitted that the order of Ld CIT(A) is patently illegal and unjustified. 6. On the contrary, the learned counsel for the assessee supported the order of Ld. CIT(A) on this issue and submitted that the Ld. CIT(A) has only directed to verify the claim. Ld. Counsel for the assessee submitted that the assessee can not ben termed as assessee in default when the tax has been paid in view of the decision of the Hon ble Apex Court rendered in the case of Hindustan Coca Cola Beverages Ltd. Vs. CIT 293 ITR 226. In rejoinder, the Ld. CIT D.R. submitted that the direction of Ld. CIT(A) tantamount to setting aside of the issue and such power is not available to the Ld. CIT(A). He further submitted that the Ld. CIT(A) at one hand directed to delete the addition, on the other hand, directed the Assessing Officer to verify the claim of the assessee that the payee company have declared in their retu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the ground is referred to separately, which may kindly be considered independent of each other. 1. Ground No. 1- The Appeal is not liable to deduct tax on discount extended to its pre-paid distributors on distribution of pre-paid SIM cards/talktime. 1.1 On the facts and circumstances of the case and in law, the learned CIT(A) has erred in upholding the action of the learned TDS officer in holding the Appellant to be an assessee in default for non deduction of tax on discount extended by the Appellant to the distributors of its pre-paid SIM cards/talktime during the period January, 2007 to March, 2007 and thus, holding the Appellant is liable to pay tax under section 201(1) and interest under section 201(1A) of the Act. 1.2 On the facts and circumstances of the case and in law, the learned CIT(A) has erred in upholding the action of the learned TDS officer by holding that the relationship between the Appellant and the distributors of pre-paid SIM cards/talk time is not that of Principal to Principal and the discount allowed to the distributors is in nature of commission liable for deduction of tax as envisaged under section 194H of the Act. 1.3 On the facts and c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .. On the facts and circumstances of the case and in law, the ld. TDS Officer has erred in passing the order u/s 201(1)/ 201(1A) of the Act after lapse of one year from the end of the financial year in which the proceedings were initiated and hence the impugned order is barred by limitation and is bad in law. 11. The assessee's counsel Shri Salil Kapoor, Advocate in support of the ground raised in appeal contends that the assessee is not liable to make deduction of tax at source as Section 194H is not applicable to him, as the assessee was not responsible to make payment as the assessee was to receive the payment from the distributor and not to make the payment. Secondly, the distributor is not assessee's agent and that the business transaction is principal to principal basis. Thirdly, the discount allowed by the assessee is not their income in view of the fact that they have further passed that discount to sub7 distributor / agent. Fourthly, the assessee cannot be treated as assessee in default unless and until it is held by the Assessing Officer that recipient has not paid taxes on the income received from the assessee in view of the judgement rendered by Hon'ble ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t in the case of NTPC Ltd. vs. CIT (1998) 229 ITR 383 (SC). 15. On the contrary, the ld. Counsel for the assessee Shri Salil Kapoor submitted that the issue raised is purely on the question of law arising from the assessment order. Therefore, it cannot be said that this issue is not arising out of the record. He relied on the decision of Hon'ble Supreme Court in the case of NTPC Ltd. vs. CIT (1998) 229 ITR 383 (SC). 16. We have considered the rival submissions of the parties and perused the materials available on record. We find that the Hon'ble Apex Court in the case of of NTPC Ltd. vs. CIT (Supra) has held that undoubtedly, the Tribunal has the discretion to allow or not to allow a new ground to be raised. But where the Tribunal is only required to consider the question of law arising from facts which are on record in the assessment proceedings, there is no reason why such a question should not be allowed to be raised where it is necessary to consider that question in order to correctly assess the tax liability of an assessee. In the present case the undisputed facts are that a survey was conducted and on the basis of the evidence gathered during the course of surve ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncial year in which proceedings u/s 201(1) are initiated. The amendment was introduced in Section 201 by way of insertion of sub-section 3 by the Finance (No.2) Act, 2009 from 01- 04-2010 which cannot be made applicable to the case of the appellant - assessee as proceedings have already become barred by time limitation on 31-03-2010. 18. On the contrary, contentions of the ld. DR on the merit of the additional ground are as under:- On merits of additional ground raised by the assessee it is contented that the two letters dated 29.12.2008 and 14.01.2009 are in relation to survey proceedings with the limited purpose of collecting information from the assessee and the same does not reveal any action pursuant to the power content u/s 201 of the I.T. Act. It therefore, is farfetched to presume that letter dated 29.12.2008 and a further letter dated 14.01.2009 which was in continuation of the earlier letter dated 29.12.2008 are in consequence of failure to deduct or pay in terms of section 201 of the Act. The first notice issued for initiating proceedings in respect of short deduction at source was dated 05.10.2009. Going by this show cause notice the liability stood determi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ls. We find no merit into the contentions of the ld. Counsel for the assessee. Firstly, the survey proceedings and assessment proceedings are two different and distinct proceedings . The letter dated 14-01- 2009 was in continuation to the information gathered on 29-12-2008. Therefore, it cannot be said that proceedings u/s 201 of the Act was initiated. A bare reading of Section 201 makes it clear that it is invoked as a consequence of failure to deduct or pay tax. Therefore, in our considered view, the information gathered during survey proceeding and on the basis of such information, if the AO finds that assessee was required to deduct tax and the assessee has not deducted the tax or has not paid the tax after deduction then he would be empowered to invoke the provisions of Section 201 of the Act by issuing show cause notice for initiation of proceedings u/s 201 of the Act. Hence, the point of time when the AO finds that the assessee was required to deduct tax and has not deducted or paid consequence thereof, he issues the show cause notice to the assessee would be starting point for reckoning limitation for the purpose of Section 201 of the Act. In view of the above discussions, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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